Cibi e Bevande
Danone: Making progress on Renew Danone Further growth acceleration in the third quarter
2022 Third-Quarter Sales
Press release – Paris, October 27, 2022
Making progress on Renew Danone
Further growth acceleration in the third quarter
Antoine de Saint-Affrique: CEO statement
“ In what remains a challenging environment, we continue to display consistent progress in all aspects of our Renew agenda, with active portfolio management and a disciplined approach to boosting our winners, fixing our underperformers and driving our core, as exemplified by the ongoing transformation of our European dairy platform.
Q3 was another quarter of strong growth, with sales up +9.5% on a like-for-like basis, led by a sequential growth acceleration across all our categories and geographies. We now expect LFL sales growth between +7 and +8% in the full-year 2022.
We continue to implement pricing actions in a responsible and disciplined manner, while focusing on the quality of our execution and reinvesting behind our brands and capabilities. This shows in the performance of our Specialized Nutrition business, led by Aptamil, in Waters, where our evian, Bonafont and Aqua brands continue to perform strongly in the marketplace, but also in EDP, with the resilience of portfolio, notably in the US, Canada and Japan.”
I. 2022 THIRD-QUARTER SALES
In the third quarter of 2022 , consolidated sales stood at €7.3 bn, up +9.5% on a like-for-like basis, with price up +10.9% and volume/mix down -1.4%. On a reported basis, sales increased by +19.1%, benefiting notably from a positive forex impact of +7.6%, reflecting in particular the appreciation of the US dollar and various Asian and Latin American currencies against the euro. Reported sales were also driven by a positive organic contribution of hyperinflation geographies to growth of +1.4%, as well as a slightly negative scope effect of -0.2%, resulting mainly from the impact of the disposal of Vega.
Performance by geographical zone
Europe posted sales growth of +6.0% in Q3 2022 on a like-for-like basis , driven by +8.0% growth in price, while volume/mix declined by -2.0%. EDP registered +2.2% growth in the region, with a contrasted performance by geography, with sales and volumes impacted by portfolio choices and temporary delivery suspensions in some countries such as Germany and Belgium. Other countries benefited from the good momentum of key brands like Actimel , Danone , Yopro and Danette . Specialized Nutrition posted +9.5% growth, led by Aptamil , which registered broad-based and competitive growth in the quarter. Waters reported +9.2% growth, supported by all brands.
North America sales were up by +11.2% in Q3 2022 on a like-for-like basis . Growth was balanced and competitive, driven by accelerated pricing, up +10.2%, and by the continued roll-out of Revenue Growth Management (RGM) initiatives, leading to resilient volume/mix, at +1.0%. In EDP, growth was led by both Dairy, with International Delight , Activia and Oikos up double digits, and Plant-based, with Silk up high single digits. Growth in the region was also sustained by the strong momentum in Waters and Specialized Nutrition.
China, North Asia & Oceania posted sales growth of +6.8% in Q3 2022 on a like-for-like basis , with price up +1.6% and volume/mix up +5.2%. In China, Infant Milk Formula sales registered competitive growth on a high base, led by Aptamil , which continued to gain share in international and domestic labels. Adult Nutrition and Pediatric Specialties registered another quarter of outstanding growth, while in Waters, Mizone 's performance improved sequentially and market shares stabilized, despite challenging operating conditions. Beyond China, sales in Japan accelerated further, led by Bio and Oikos functional propositions.
Rest of the World registered sales growth of +13.6% in Q3 2022 on a like-for-like basis , driven by price up +19.5%, while volume/mix declined by -5.9%. Excluding EDP Russia, volume/mix was down -1.7% in the region. In Indonesia, sales increased by double digits, led by Aqua in Waters and by SGM and Bebelac in Specialized Nutrition, with resilient market share supported by disciplined execution. In Latin America, sales were up double digits, with all categories contributing.
II. 2022 GUIDANCE UPGRADED
Price-led like-for-like sales growth now expected between +7 and +8%, versus +5 to +6% previously; recurring operating margin expected above 12%.
III. MAJOR DEVELOPMENTS OVER THE PERIOD
Proforma Like-for-like sales growth and volume/mix growth by quarter excluding EDP Russia business (unaudited figures):
IV. IFRS STANDARDS AND FINANCIAL INDICATORS NOT DEFINED IN IFRS
IAS29: impact on reported data
Danone has been applying IAS 29 in hyperinflation countries as defined in IFRS, except for Turkey in view of the unmaterial impact. Adoption of IAS 29 in these hyperinflationary countries requires its non-monetary assets and liabilities and its income statement to be restated to reflect the changes in the general pricing power of its functional currency, leading to a gain or loss on the net monetary position included in the net income. Moreover, its financial statements are converted into euros using the closing exchange rate of the relevant period.
Breakdown by quarter of 9M 2022 sales after application of IAS 29
9M 2022 sales correspond to the addition of:
Results from the application of IAS29 until September 30, 2022 to Q1 sales of entities of hyperinflation countries.
Results from the application of IAS29 until September 30, 2022 to Q2 sales of entities of hyperinflation countries.
Financial indicators not defined in IFRS
Due to rounding, the sum of values presented may differ from totals as reported. Such differences are not material.
Like-for-like changes in sales, recurring operating income and recurring operating margin reflect Danone's organic performance and essentially exclude the impact of:
Bridge from reported data to like-for-like data
Recurring operating income is defined as Danone's operating income excluding Other operating income and expenses. Other operating income and expenses comprise items that, because of their significant or unusual nature, cannot be viewed as inherent to Danone's recurring activity and have limited predictive value, thus distorting the assessment of its recurring operating performance and its evolution. These mainly include:
Recurring operating margin is defined as Recurring operating income over Sales ratio.
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FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking statements concerning Danone. In some cases, you can identify these forward-looking statements by forward-looking words, such as “estimate”, “expect”, “anticipate”, “project”, “plan”, “intend”, “objective”, “believe”, “forecast”, “guidance”, “foresee”, “likely”, “may”, “should”, “goal”, “target”, “might”, “will”, “could”, “predict”, “continue”, “convinced” and “confident,” the negative or plural of these words and other comparable terminology. Forward looking statements in this document include, but are not limited to, predictions of future activities, operations, direction, performance and results of Danone.
Although Danone believes its expectations are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those anticipated in these forward-looking statements. For a detailed description of these risks and uncertainties, please refer to the “Risk Factor” section of Danone's Universal Registration Document (the current version of which is available at www.danone.com ).
Subject to regulatory requirements, Danone does not undertake to publicly update or revise any of these forward-looking statements. This document does not constitute an offer to sell, or a solicitation of an offer to buy Danone securities.
The presentation to analysts and investors will be broadcast live today from 6:00 p.m. (Paris time)
on Danone's website ( www.danone.com ) .
Related slides will also be available on the website in the Investors section .
APPENDIX – Sales by geographical zone and by category (in € million)
All references in this document to Like-for-like (LFL) changes, Recurring operating margin, correspond to financial indicators not defined in IFRS. Their definitions, as well as their reconciliation with financial statements, are listed on pages 4 and 5.
1 United States and Canada; China, Japan, Australia and New Zealand; Essential Dairy and Plant-based
Based on the accounts and foreign exchange rates as of June 30th, 2022
1 United States and Canada; China, Japan, Australia and New Zealand; Essential Dairy and Plant-based
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